Motorola, Inc.: Strategy of Mobile Devices Division Divestiture
I. Introduction The January 2008 announcement by Motorola, Inc. that it might spin off its Mobile Devices division followed years of declining market share in the mobile phone industry. After the wild success of the company’s “RAZR” mobile phone in 2004-06, Motorola failed to retain market share as Apple’s iPhone claimed “must-have” status and traditional mobile phones became increasingly commoditized. Even with the Mobile Devices division’s recent poor performance, it is something of a shock to learn that the mobile phone industry’s first mover is planning to divest itself of mobile phones. This paper discusses whether divestiture is an appropriate response to the current mobile phones industry environment.
A. Company History On September 25, 1928 Paul V. Galvin and his brother Joseph incorporated Motorola`s founding company, the Galvin Manufacturing Corporation, in Chicago. In 1930, Paul V. Galvin created the brand “Motorola” for a car radio (“motor”: motorcar and “ola”: implied a sound). The company spent years developing portable two-way radio systems, which led to Motorola’s vision of personal portable communications. In 1940, the company developed the Handie-Talkie SCR536 AM portable two-way radio, which was used on the World War II battlefronts. The first FM portable two-way radio was created in 1943 for the U.S. Army Signal Corps and the following year it was used for commercial purposes. A new technology provided the opportunity for Motorola to help people to communicate. It was the car radiotelephone industry. In 1946 the radiotelephone service began in the U.S., and the company produced mobile telephones in cars called “car phones”. The popularity of these phones grew, but with limited frequencies available, car phone systems allowed few calls at the same time and there were some problems with interference. The U.S. Federal Communications Commission (“FCC”) proposed a solution for this problem. It was to allocate frequencies in the
A. Company History On September 25, 1928 Paul V. Galvin and his brother Joseph incorporated Motorola`s founding company, the Galvin Manufacturing Corporation, in Chicago. In 1930, Paul V. Galvin created the brand “Motorola” for a car radio (“motor”: motorcar and “ola”: implied a sound). The company spent years developing portable two-way radio systems, which led to Motorola’s vision of personal portable communications. In 1940, the company developed the Handie-Talkie SCR536 AM portable two-way radio, which was used on the World War II battlefronts. The first FM portable two-way radio was created in 1943 for the U.S. Army Signal Corps and the following year it was used for commercial purposes. A new technology provided the opportunity for Motorola to help people to communicate. It was the car radiotelephone industry. In 1946 the radiotelephone service began in the U.S., and the company produced mobile telephones in cars called “car phones”. The popularity of these phones grew, but with limited frequencies available, car phone systems allowed few calls at the same time and there were some problems with interference. The U.S. Federal Communications Commission (“FCC”) proposed a solution for this problem. It was to allocate frequencies in the